Financial incentives successfully improve hospital mortality rates

23 November 2012

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A study of hospitals across Northwest England has shown that a
combination of competition and collaboration, with financial incentives
for success, gave a significant fall in mortality rates for certain
conditions.

Health experts and economists from the Universities of
Nottingham, Manchester, Cambridge and Birmingham examined how the
introduction of a scheme, called Advancing Quality, that paid
hospitals bonuses based on measures of quality, affected the
delivery of emergency care.

The scheme was associated with a relative reduction in the
mortality rate of 6% over 18 months — equivalent to almost 900 lives
saved.

Co-author Professor Ruth McDonald, Professor of Health Innovation
and Learning at Nottingham University Business School, said the
findings could have major policy implications. She said,
“Pay-for-performance schemes are being widely adopted, yet until now
there’s been little evidence that they improve patient outcomes. Our
findings suggest they can make a positive and significant difference
but that whether they do so depends very much on how they’re
designed and implemented.”

Reasons for success

Professor McDonald, a Professor of Health Innovation and
Learning, said the findings were in marked contrast to those of
similar studies in America. She said: “Research on
pay-for-performance initiatives in the US has shown their effect on
hospitals’ care processes to be at best modest and short-term.
Evidence of an effect on patient outcomes has been even weaker, with
the largest scheme apparently having no impact on patient mortality.
So we have to ask ourselves what made a difference here — and it
seems the answer most likely lies in how Advancing Quality was
implemented.

“The combination of a competitive framework and the opportunity
to get together to solve shared problems seems to be key to its
success. In spite of the ‘tournament’ format of the initiative,
staff from all the participating hospitals met regularly to discuss
improvements. This kind of interaction was very different from the
approach in the US, where large-scale ‘webinars’ were chosen over
face-to-face meetings.

“All of this suggests that how these schemes are put into
practice and the context in which they’re introduced can be crucial
to patient outcomes.”

The research team compared data from the North West with figures
from around the UK to obtain a highly detailed picture of Advancing
Quality’s impact. In total, information for nearly a million
patients was examined, including more than 134,000 at the hospitals
that took part in the scheme.

A nationwide pay-for-performance system based on withholding
payments rather than paying bonuses now operates at all NHS
hospitals. Professor McDonald added: “These schemes can seem very
simple on paper, but in practice they can be very difficult to
implement successfully.”